LONDON, June 4 (Thomson Reuters Foundation) - British companies need to put ethics at the heart of their work to survive in the 21st century, said the head of a leading recruitment agency which adopted a social mission last year, as an array of scandals erode public trust in business.

The 59-year-old Cordant Group, with revenues of 840 million pounds ($1.12 billion), said in September that it will start reinvesting most of its profits to benefit society not shareholders - making it Britain's largest social enterprise.

"For us to operate effectively in a future environment, an ethical core to all we do will be essential," Phillip Ullmann, who heads the London-based Cordant Group with the job title of chief energiser, told the Thomson Reuters Foundation.

"As the population demands that standard, we can only operate against it."

Britain is seen as a global leader in the innovative social enterprise sector, with about 70,000 businesses employing nearly 1 million people last year, according to Social Enterprise UK, which represents such firms, up from 55,000 companies in 2007.

"If you don't make this transition, you're finished," said Ullmann, who has led the family-owned company for two decades.

"The next generation will not work for you, will not purchase products from you ... We are seeing it now. We can offer well-paid jobs to people, they'll ask to know a bit about the organisation and they'll refuse the job."

Trust in business in Britain has fallen to 43 percent from 49 percent in the last five years, a survey by the marketing firm Edelman found in January, with excessively high executive pay, tax avoidance and lack of transparency as the main drivers.

Other scandals - such as Facebook's sharing of users' personal data without their consent and the collapse of the British construction firm Carillion - have also contributed to public wariness about big business, Ullmann said.

Parliamentarians described Britain's largest construction bankruptcy as a story of "recklessness, hubris and greed", with Carillion executives more concerned with protecting bonuses than finding problems at the firm.

"Capitalism hasn't worked," said Ullmann, whose firm sends 125,000 temporary staff a year to work for 5,000 clients including Amazon and Tesco.

"There is a need for a new model and that is social business."

Cordant has capped executive salaries at 20 times that of the lowest paid worker and put a limit on shareholder dividends, while also promising a staff profit-sharing scheme.

It will reinvest most of its profits in education and healthcare programmes that will have a positive impact on society, the company said on its website.

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